LONDON (MarketWatch) — Where does Germany keep its gold reserves? It might sound like a silly question. In Germany, of course. Probably in a very deep vault somewhere in Frankfurt, surrounded by the best security systems that Teutonic technical brilliance can create, according to Market Watch.

As it turns out, however, that is the wrong answer.

Much of the German gold, the second largest national reserves in the world, is held in New York, London and Paris. Now there is a campaign under way in Germany to bring the metal back home — and it is gathering strength all the time.

That tells us three things about the global monetary system, none of them especially reassuring.

The German gold reserves are among the most significant in the world. The country controls 3,396 tons of the stuff. That is a lot less than the United States’ 8,133 tons, but then Germany is a smaller country, and it has never had the world’s reserve currency. It is a lot more than the 2,451 tons held by the Italians or the 2,435 tons held by the French.

Much of it was built up under the old Bretton Woods system that operated from the end of World War II until 1971. Trade deficits and surpluses were settled by central banks in gold, and since Germany regularly ran big surpluses it ended up with a lot of the metal.

But most of it was not held in Germany itself. Much of it was held abroad, mostly in the U.S., U.K. or France. An estimated 66% is held at the New York Federal Reserve, 21% at the Bank of England, and 8% at the Bank of France. The old West Germany was on the front line of the Cold War and if the Russians had ever invaded their tanks would have headed straight for the bullion vaults. There was no point in leaving such a tempting target open to attack.

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